Startup 3.0 Introduced
Is the third time really the charm? A bipartisan group—U.S. Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.), along with Chris Coons (D-Del.) and Roy Blunt (R-Mo.)—recently introduced Startup Act 3.0, aiming to revitalize the economy by making it easier to start and grow new firms.
It creates both Entrepreneur and STEM Visas for highly-educated and entrepreneurial immigrants to stay in the United States where their talent and new ideas can fuel economic growth and create American jobs. The legislation also modifies the tax code to encourage investment in new businesses, accelerates the commercialization of university research that can lead to new ventures, and seeks to improve the regulatory process.
Research shows that for close to three decades, companies less than five years old have created almost all net new jobs in America – averaging about three million jobs each year. Additionally, immigrants to the United States have a long history of creating businesses in America. Of the current Fortune 500 companies – including Apple, Google and eBay – more than 40 percent were founded by a first- or second-generation American. These American companies employ more than 10 million people. Both American and foreign-born entrepreneurs are needed to jumpstart the economy through the creation and growth of new businesses.
Many of the principles included in Startup Act 3.0 are based on the research and analysis by the Ewing Marion Kauffman Foundation, and have been endorsed by President Obama’s Council on Jobs and Competitiveness.
“Kauffman Foundation research has highlighted the economic importance of new and young firms – they create jobs, introduce innovations, and drive economic growth,” said Dane Stangler, acting director of Research & Policy at the Kauffman Foundation. “Yet they continue to face many barriers to entry and growth, which policymakers can help address. Our research suggests that improving access to capital, creating new pathways for immigrant entrepreneurs, and regulatory reform will help address these barriers."
Startup Act 3.0 includes the following provisions:
- Creates an Entrepreneur’s Visa for legal immigrants, so they can remain in the United States, launch businesses and create jobs;
- Creates a new STEM visa so U.S.-educated foreign students, who graduate with a master’s or Ph.D. in science, technology, engineering or mathematics, can receive a green card and stay in this country where their talent and ideas can fuel growth and create American jobs;
- Eliminates the per-country caps for employment-based immigrant visas – which hinder U.S. employers from recruiting the top-tier talent they need to grow;
- Makes permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years – so investors can provide financial stability at a critical juncture of firm growth;
- Creates a limited research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts. This R&D credit is designed to allow startups to offset employee taxes – freeing up resources to help these young companies expand and create jobs;
- Uses existing federal R&D funding to support university initiatives designed to bring cutting-edge research to the marketplace more quickly where it can propel economic growth;
- Requires all government agencies to conduct a cost-benefit analysis of all proposed “significant rules” with an economic impact of $100 million or more. This new requirement will help determine the efficacy of regulations and their potential impact on the formation and growth of new businesses; and
- Directs the U.S. Department of Commerce to assess state and local policies that aid in the development of new businesses. Through the publication of reports on new business formation and the entrepreneurial environment, lawmakers will be better equipped to encourage entrepreneurship with the most successful policies.